New highs in Nasdaq, key indicator as others trail

MAAD & CPFL Review


Market Snapshot for session ending 09-09-13


Day Change


S&P 500 Index




Dow Jones Industrials




NASDAQ Composite




Value Line Index




Minor Cycle* (Short-term trend lasting days to a few weeks) Positive

Intermediate Cycle* (Medium trend lasting weeks to several months) Neutral

Major Cycle* (Long-term trend lasting several months to years) Positive

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • Follow-through buying Tuesday pushed all major indexes higher with NASDAQ Composite hitting yet another new high and best level since March 2009. Cumulative Volume (CV) confirmed COMPX move.
  • Market volume rose nearly 13%. NYSE a/d data was positive by 1.63 to 1 with NYSE up/down volume ahead by 2.83 to 1.
  • To reverse short-term trend to negative, S&P 500 must sell below lower edge of 10-Day Price Channel (1635.33 through Wednesday). Intermediate Cycle, as measured by lower edge of 10-Week Price Channel (1649.34 through September 13) remains tentatively positive.
  • Our VIX-based short-term volatility indicator was last just above “Neutral” at 53% after making a statistical low of 13.6% on August 30. Most recent indicator high was 98.3% on August 5.
  • Daily MAAD rallied to another new high Tuesday with 15 issues positive and 5 negative. Daily MAAD Ratio was “Overbought” at 2.02.
  • Daily CPFL was positive by 1.74 to 1 Tuesday, remains near long-term uptrend line stretching back to October 2011 with Daily CPFL Ratio deeply “Oversold” at .59.

Market Overview – What We Think:

  • Market strength over past several sessions has all but eliminated deeply “Oversold” near-term conditions evident at recent lows. “Neutral” to moderately “Overbought” conditions now prevail.
  • While market is not yet seriously overheated, what could become an increasing problem in days just ahead is relationship of pricing to August highs. At this juncture, only NASDAQ Composite has hit new high with Value Line index close. S&P 500 remains in third place with Dow 30 still lagging substantially.
  • If market peaks out on near-term before new highs are made in all indexes, failures would not bode well for staying power of larger, and mature, Intermediate Cycle that has been underway since last November.
  • Until or unless new highs are made, we cannot rule out possibility strength since recent lows could ultimately prove to be merely “return action” rally into developing Intermediate Cycle high, COMPX and MAAD new highs notwithstanding.
  • But for moment, so long as short-term trend remains intact, possibility remains further price improvement could follow and that MAAD is more accurately reflecting Smart Money tendencies than other breadth-based indicators.

Index Price Channel Stops (10-Bar MAs of Highs/Lows ) Weekly Monthly








S&P 500 Index

SELL 1636.87

SELL 1635.63

SELL 1635.33

SELL 1638.05

SELL 1638.25

SELL 1649.34

SELL 1448.73

Dow Jones Industrials

SELL 14831.81

SELL 14814.37

SELL 14805.00

SELL 14821.72

SELL 14813.32

BUY 15497.13

SELL 13465.21

NASDAQ Composite

SELL 3597.65

SELL 3596.45

SELL 3596.56

SELL 3607.40

SELL 3609.22

SELL 3519.12

SELL 3044.23

Value Line Index

SELL 3831.74

SELL 3826.34

SELL 3828.97

SELL 3828.38

SELL 3828.30

SELL 3829.01

SELL 3180.51

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.

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